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Fred Perelman, a Stockbroker with Avenir Financial Group, was charged by Financial Industry Regulatory Authority Department of Enforcement in a Complaint alleging that Perelman failed to cooperate in a FINRA investigation into Perelman’s outside business activities and business practices within Avenir. Department of Enforcement v. Perelman, No. 2015047104201 (Oct. 18, 2015).
According to the Complaint, on November 4, 2013, Avenir had filed a Form U5 (termination notice for securities industry registration) with FINRA stating that Perelman had been discharged for job abandonment, lack of production, and bouncing a check to the firm for $4,612.00.
The Complaint further indicated that FINRA, in conducting a cycle examination into Avenir, requested that Perelman provide information and documentation pertaining to a personal activity questionnaire and six liens and judgements that were filed against Perelman that did not get disclosed on his Form U4. The personal activity questionnaire, according to the Complaint, sought information about Perelman’s firm customers, outside business activities, and business practices.
The Complaint indicated that Perelman failed to respond to two requests for information and documentation, pursuant to Rule 8210. After repeated attempts to retrieve the information and to no avail, FINRA alleged that Perelman had violated Rules 8210 and 2010.
FINRA Stockbrokers like Perelman who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and equitable principles of trade.
Public disclosure records reveal that Perelman has been subject to three disclosure incidents. On September 4, 1997, Perelman was charged with a felony for aggravated unlicensed operation of an automobile and possession of a forged instrument. On August 1, 2006, Perelman’s former employer, Sky Capital, LLC, discharged Perelman based on allegations that Perelman had not informed his firm of an outside business activity or that he was maintaining dual registration.
Selling away, also known as private securities transactions or undisclosed outside business activities, occurs when a stockbroker engages or participates in the sale of securities to investors outside of the formal approval of the securities firm with whom they are associated.
As a general matter, stockbrokers are only permitted to engage in the solicitation or sale of investments and investment related products approved by their firm. However, quite frequently, stockbrokers solicit, participate, or directly engage in the sale of typically unregistered securities or investments without the approval and outside of the auspices of their firm. These investments may take on many forms, and may include the recommendation of an outside money manager, or a hedge fund, which may sometimes turn out to be a Ponzi scheme. Sometimes these outside investments may include off-shore securities, insurance trusts, stocks or ownership interests in small businesses, startup ventures, corporate debentures, mortgage notes, private placements, promissory notes, oil & gas interests, real estate partnerships, pre-IPO shares, and a variety of other investments.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.